Kathryn Brennan, Plaintiff, -Against- Bally Total Fitness, Defendant.

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KATHRYN BRENNAN, Plaintiff, -against- BALLY TOTAL FITNESS, Defendant.

01 Civ. 533 (SAS)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

198 F. Supp. 2d 377; 2002 U.S. Dist.
 
January 2, 2002, Decided  
January 3, 2002, Filed

DISPOSITION:  [**1]  Defendant's motion to compel Brennan to arbitrate denied. Brennan's cross-motion to strike the defense of arbitration and stay arbitration granted.

COUNSEL: For Plaintiff: Mona C. Engel, Esq., Law Offices of Robert F. Danzi, Westbury, New York.  
For Defendant: Jed L. Marcus, Esq., Gotta, Glassman & Hoffman, P.A., Roseland, New Jersey.

JUDGES: SHIRA A. SCHEINDLIN, U.S.D.J.

OPINIONBY: SHIRA A. SCHEINDLIN

OPINION:  [*378]  OPINION AND ORDER
 
SHIRA A. SCHEINDLIN, U.S.D.J.:

In January 2001, Kathryn Brennan sued her former employer, Bally Total Fitness Corp. ("Bally"), pursuant to Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e et seq., and the Americans with Disabilities Act of 1990 ("ADA"), 42 U.S.C. § 12101 et seq., alleging that she was the victim of sexual harassment and disability discrimination. Relying on the fact that Brennan signed an arbitration agreement, Bally moved to dismiss the Complaint and compel arbitration in accordance with Sections 3 and 4 of the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 3 and 4.

In July 2001, this motion was denied pending further discovery on the issue [**2]  of whether the arbitration agreement that Brennan signed was an unconscionable contract. See Brennan v. Bally Total Fitness, 153 F. Supp. 2d 408 (S.D.N.Y. 2001)("Brennan I"). After the parties conducted discovery, they presented witnesses along with other evidence at a jurisdictional hearing held in October 2001. See 10/30/01 Transcript of Jurisdictional Hearing ("Tr.").

Because I now conclude that the agreement to arbitrate was unconscionable and therefore unenforceable, Bally's motion to dismiss the Complaint and to compel arbitration is denied. For the same reason, Brennan's cross-motion to strike the defense and stay arbitration is granted.  

I. PROCEDURAL HISTORY

On December 17, 1998, Brennan signed a document entitled "Employee Dispute Resolution Procedure" (the "EDRP" or  [*379]  "Agreement"). See Brennan I, 153 F. Supp. 2d at 410. Brennan I held that because this document qualified as an entire arbitration agreement (rather than an arbitration clause within a contract), this Court has jurisdiction to decide its enforceability. Id. at 414-15. Further, Brennan I determined that the focus of the Court's inquiry [**3]  must be the first agreement and not the subsequent versions. See id. at 415 (holding that subsequent versions of the EDRP were not valid contracts because their formation did not conform to the requirements for contract modification set forth in the original EDRP).

At the jurisdictional hearing held on October 30, 2001, Bally presented two witnesses. The first witness was Fred Infante, Regional Director of Human Resources and a Bally attorney, who presented the arbitration agreement at the December 17, 1998 meeting in Sheepshead Bay, Brooklyn. See Tr. at 78. The second witness was John Donovan, Area Supervisor at Bally, who worked at Bally's Sheepshead Bay at the time of the meeting in 1998. See id. at 205. Brennan testified at the hearing, and also presented Yvette Diaz, a close friend and assistant manager/program director at the Bally's Sheepshead Bay facility at the time of the 1998 meeting. See id. at 137, 167.  

II. FINDINGS OF FACT

Based on the pleadings, the affidavits, and the testimony at the hearing, I make the following findings of fact. Brennan began working for Bally in January 1996. See Complaint ("Compl.") P 8. In June 1998,  [**4]  Brennan complained to Fred Infante, Bally's contact person for employee complaints of harassment, that she was being sexually harassed by her manager, Mike Senal. See 3/28/01 Affidavit of Kathryn Brennan ("Brennan Aff.") P 4....
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